Self-construal and feature centrality

The current research investigates the interactive influence of self-construal and product feature centrality on product judgment tasks. Feature centrality refers to the extent to which a feature is integral to the product concept and its network of correlated features, and contributes to the coherence of the product’s conceptual representation. While the categorization literature suggests that central features (versus less central features) are weighted more when consumers make judgments about a product, across two studies we find such effect is bounded by individuals’ self-construal. In particular, whereas independent consumers, adopting an analytical thinking style, rely more on central features than less central features in product categorization and evaluations, interdependent consumers, employing a holistic thinking style, use both features to form their judgments.     

A rationale for law of technological substitution

This paper links the popular S-shaped curves often used to represent the path of technological substitution with the evolutionary model of a self-organizing industrial system. In particular, the empirical Fisher-Pry law of technological substitution is given a conceptual rationale by treating technological innovations as structural fluctuations which affect an industry's growth path as defined by a set of non-linear differential equations. In so doing, the paper draws heavily on the articles by Allen and Batten.     

International Evidence on Institutional Trading Behavior and Price Impact

This study characterizes institutional trading in international stocks from 37 countries during 1997 to 1998 and 2001. We find that the underlying market condition is a major determinant of the price impact and, more importantly, of the asymmetry between price impacts of institutional buy and sell orders. In bullish markets, institutional purchases have a bigger price impact than sells; however, in the bearish markets, sells have a higher price impact. This differs from previous findings on price impact asymmetry. Our study further suggests that price impact varies depending on order characteristics, firm‐specific factors, and cross‐country differences.     

Macroeconomic variables and the E/P ratio: Is inflation really positively associated with the E/P ratio?

We examine the economywide E/P ratio both over a long time period (1952–2003) and by dividing the entire period into subperiods. We have two main objectives. First, we reexamine the puzzling result documented by Modigliani and Cohn (1979), who find that, contrary to theory, the economy wide E/P ratio and inflation are positively correlated. Our longer period of analysis allows us to divide the entire period into subperiods with differing macroeconomic environments. We find that the Modigliani and Cohn anomaly is period specific. The association between the E/P ratio and inflation reverses from one period to another. Hence, the relation between inflation and the economywide E/P ratio is not stable over a long time period. Second, we analyze the associations between the economywide E/P ratio and its two main drivers as given by the Gordon (1962) model. We find that the economywide E/P ratio (a) is not associated with the real interest rate and (b) is weakly negatively associated with the expected growth rate. Findings for inflation do not change when we include or exclude other E/P drivers in regression specifications.     

House Buying Behavior: An Empirical Study in Cross-Cultural Buyer Behavior

Some preliminary findings concerning experience, motivation, and search are presented from a cross-cultural study of buyer behavior in housing markets. Data were obtained from probability samples of 652 households in Connecticut and Northwest England. The results include comparative analyses of several dimensions of external search, five aspects of experience, reasons for moving, and husband-wife reasons for buying. Predictive models of search are developed with multivariate regression techniques. The findings indicate that the experience and motivational variables are not very powerful predictors of search. Significant cultural differences do occur in the level of many variables, but there are some interesting similarities in the underlying factor structure.     

On axiomatic characterization of some non-additive measures of information

An axiomatic characterization of non-additive measures of information associated with a pair of probability distributions having the same number of elements has been given. This quantity under additional suitable postulates leads to the non-additive Entropy, Directed-Divergence and Inaccuracy of one or more parameters.     

Early Movers Advantage? Evidence from Short Selling during After‐Hours on Earnings Announcement Days

We examine short sellers’ after‐hours trading (AHT) following quarterly earnings announcements released outside of the normal trading hours. Our innovation is to use the actual short trades immediately after the announcements. We find that on these earnings announcement days, there is significant shorting activity in AHT relative to shorting activity both during AHT on nonannouncements days and during regular trading sessions around announcements. Short sellers who trade after‐hours on announcement days earn an excess return of 0.82% and 1.40% during before‐market‐open (BMO) and after‐market‐close (AMC)sessions, respectively. The magnitude of these returns increases to 1.48 (3.92%) for BMO (AMC) earnings announcements with negative surprise. We find that the reactive short selling during AHT has information in predicting future returns. Short sellers’ trades have no predictive power if they wait for the market to open to trade during regular hours. In addition, we find that the weighted price contribution during AHT increases with an increase in after‐hours short selling. Overall, our results suggest that short sellers in AHT are informed. Our findings remain robust using alternative holding periods and after controlling for macroeconomic news announcements during BMO sessions.     

The Tax Exemption to Subchapter S Banks: Who Gets the Benefit?

The Small Business Job Protection Act of 1996 allows U.S. banks to adopt the Subchapter S status. We investigate if the Subchapter S banks use tax benefits for the intended purposes of “protecting jobs,” “creating opportunities” and “increasing take home pay of workers.” We find that the tax benefits: (a) are not used in expenses related to protection of jobs, (b) do not lead to greater employment opportunities within the Subchapter S banks, and (c) do not benefit the employees in the form of increased salaries and benefits. Our results indicate that bank owners are sole beneficiaries of the tax exemption benefits.     

Sell on the news: Differences of opinion,short-sales constraints,and returns around earnings announcements

Miller [1977. Risk, uncertainty, and divergence of opinion. Journal of Finance 32, 1151–1168] hypothesizes that prices of stocks subject to high differences of opinion and short-sales constraints are biased upward. We expect earnings announcements to reduce differences of opinion among investors, and consequently, these announcements should reduce overvaluation. Using five distinct proxies for differences of opinion, we find that high differences of opinion stocks earn significantly lower returns around earnings announcements than low differences of opinion stocks. In addition, the returns on high differences of opinion stocks are more negative within the subsample of stocks that are most difficult for investors to sell short. These results are robust when we control for the size effect and the market-to-book effect and when we examine alternative explanations such as financial leverage, earnings announcement premium, post-earnings announcement drift, return momentum, and potential biases in analysts’ forecasts. Also consistent with Miller's theory, we find that stocks subject to high differences of opinion and more binding short-sales constraints have a price run-up just prior to earnings announcements that is followed by an even larger decline after the announcements.